Question:
Ken;
I just received a notice from the bankruptcy court. One of my clients are
bailing out. (They were in financial trouble in the past and just found a
white knight savior.) Well three months into the project they pull the
plug. My question is
WHAT IS MY OBLIGATION TO CONTINUE TO PROVIDE SERVICES FOR WHICH I WILL
NEVER BE PAID? ( My contract says that if they stop paying I can stop
monitoring) Is this a violation of the proceedings? Or do I just lick my
wounds with the past debt and just make him a COD Customer from now on?
Joel Kent
FBN Security Co LLC
Windsor CT.
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Answer:
You don't have to continue providing service once your subscriber files a
bankruptcy petition. If you do provide service you can charge for the
period going forward. You cannot insist on getting money for any time prior
to the filing of the bankruptcy petition. For any money that you are owed
for prior to the petition filing you have to file a proof of claim with the
clerk of the bankruptcy court. But you can go COD going forward or not
service the account if you don't want to.
You are not a public utility that is prohibited from terminating service in
a bankruptcy situation.
For those of you owe want a more technical answer, I should point out that
the alarm contract calling for future services and payments is an executory
contract that is deemed automatically rejected in a bankruptcy case unless
assumed. Therefore, the prudent thing to do would be to insist on a new
contract with the subscriber to be signed after the bankruptcy petition is
filed.
Be careful not to demand payment of the arrears on the old contract for the
pre bankruptcy petition period. That demand would be a violation of the
bankruptcy automatic stay provision [11 USC 362]. You could of course
demand an inspection and reinstatement charge.
You should make it a habit of filing a proof of claim form with the clerk
of the bankruptcy court, even is cases where you get a notice that there
are no assets and no claim need be filed until further notice is sent out.
Often you will miss this additional notice and assets may be discovered in
cases. If the claim form or filing is too difficult [in some jurisdictions
you may have to file it electronically] then have a bankruptcy lawyer do
it. My firm would charge around $100 for comparison.
If you get a chapter 13 petition notice you should file your claim because
that is a wage earners plan and there will be a 36 to 60 month payout,
provided the subscriber - debtor makes the payments. Payments are made to a
trustee who distributes the money usually monthly.